ProJo Held Key 38 Studios Story At Request of EDC

ProJo Held Key 38 Studios Story At Request of EDC

Confidential memos and emails showed that the Providence Journal had caught wind of the very initial negotiations between Rhode Island Economic Development officials and 38 Studios, but sat on the story at the request of staff at the Rhode Island Economic Development Corporation (RIEDC). 

The delay allowed a key inital meeting between RIEDC officials and 38 Studios leaders, including Curt Schilling and Michael Corso, to move forward.

According to a series of emails between 38 Studios and Stokes, the leak to the Providence Journal jeopardized the negotiations.

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In an email from 38 Studios CEO Curt Schilling the night of March 22, 2010, Schilling indicated that a Providence Journal story would have jeopardized the next day's meeting. “One of the key pieces of the entire deal was trust, in the people and the process, I know for 100% fact that the people on my end have nothing to gain and actually A LOT to lose by revealing any of this, so someone not on our team talked," wrote Schilling.

In response to Schilling's email, Keith Stokes emailed back after 1:24 a.m. trying to keep the deal and the meeting alive.  Stokes wrote, “My strong suggestion is to have our meeting tomorrow (this was a scheduled deal negotiation meeting) and I will call reporter personally to ask that she sit on anything she has heard at this point. Keith.”

The exchange between Stokes and Schilling showed Stokes had emailed Schilling earlier that evening at 9:08 p.m. that “Providence Journal reporter, Cynthia Needham, approached the Governor and I today at 4 pm before a regularly scheduled meeting. She had very specific information…”

The meeting went forward and the Providence Journal wrote only a short story on 38 Studios interest in coming to Rhode Island two days later on page A-7 - after the negotiations were held.  

Needham, now the Deputy Business Editor at the Boston Globe, told GoLocalProv in a phone interview, "I prefer not to comment at this time," said Needham. "I don't want to get involved in any conversation about sourcing.  I haven't been a reporter for five years."

According to a former high level RIEDC official, Melissa Czerwein (Chambers at the time, her then maiden name) was asked and called Needham to hold the story.  In an interview with GoLocal this week, she said she could not remember if she had made a call.

The impact of the delay of the story is unknown, but it is clear from the email exchange that a 38 Studios story published at the inception of the negations may have torpedoed the negotiations and undermined negotiating a deal.

According to the email exchange between Rob Stolzman, outside Counsel of RIEDC and Stokes, identify that then-Attorney General and now lobbyist Patrick Lynch as the source of the leak of the meeting to Needham. The emails outline that the leak raised questions among the 38 Studios team about the ability to negotiate with the RIEDC at that key juncture.

By March 25, draft documents for the deal including the $75 million loan structure were being exchanged between EDC officials and 38 Studios leadership. 

Editors Note: The emails cited in the story appeared in exhibit of both Michael Corso and Keith Stokes. They are among the tens of thousands of pages of documents recently released.

Stokes Deposition Part 1

Stokes Deposition Part 2

Stokes Deposition Part 3

Corso Deposition

By March 25, just 48 hours after the first critical meeting, the deal between RIEDC and 38 Studios was already being defined. Draft documents of the deal and the commitment of $75 million was already being memorialized in a draft agreement letter.

See Corso Exhibit 134

Later, the following story appeared:

CYNTHIA NEEDHAM JOURNAL STAFF WRITER   
PUBLICATION: Providence Journal (RI)

SECTION: projoRhodeIsland
DATE: March 24, 2010

EDITION: 1

Page: A7 
 
Retired Red Sox pitching ace Curt Schilling is in talks with state officials about possibly moving his video game design start-up company to Rhode Island.

In an interview with The Journal, Schilling described the conversations as "preliminary discussions" and said the Ocean State is one of several his company, 38 Studios LLC, is speaking with about a potential move from its founding location in Maynard, Mass.

"Rhode Island was right next door and it just seemed like a natural fit to have a conversation," Schilling said in a telephone interview late Monday night.The state's creative arts community is also a draw."The RISD connection is a huge one. We have multiple RISD [graduates] as employees now," Schilling said. 38 Studios - the name comes from Schilling's Red Sox number - is an 80-person company developing an online multiplayer video game it hopes can compete with World of Warcraft, the popular Internet fantasy game with millions of subscription-paying players worldwide. Schilling's project has not yet launched. The Rhode Island connection grew out of a chance meeting between Schilling and Governor Carcieri at a March fundraiser at the pitcher's Medfield, Mass., home. The two fell into conversation about 38 Studios.

"My sense was that he wasn't particularly thrilled with the reception he was getting in Massachusetts, so I said: 'Come on down, we'd be happy to talk to you,' " Carcieri recalled. Schilling took him up on the offer and came to Rhode Island several times in the past few days, meeting with House Speaker Gordon D. Fox, Economic Development Corporation Director Keith Stokes and several other state officials. "I think he was just feeling as though maybe we were going to pay more attention to him," said Carcieri. State officials declined to elaborate on exactly what kind of tax credits or other legislative incentives they might offer to lure Schilling's company here. In the past, Rhode Island has offered incentives to a variety of businesses to encourage economic development, including job creation.

The former pitcher said the 38 Studios board has investigated potential out-of-state moves in the hopes of finding a place where "the long-term health and viability of the company" is best served. Schilling said he hopes to expand his staff to 400 or even 500. (With the acquisition of Baltimore, Md.'s Big Huge Games, the company added more than 50 jobs in that state, for a total staff of about 140.) Schilling's video game is being developed under the name "Copernicus." Comic book creator Todd MacFarlane and fantasy author R.A. Salvatore are working with 38 Studios on the project, which reports have suggested could launch in late 2010. Schilling would not confirm that date.
 

NOTE - a shorter version also appeared (3/23/2010). Web version after the meeting was held.